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When preparing wills and trusts, our clients often ask about the estate tax (or “death tax”). The estate tax is often the bane of any estate going through probate, forcing beneficiaries to deal with a second round of taxation before they are entitled to collect their inheritance. While Florida law is especially favorable to estate planning efforts, residents may still have to contend with taxes levied by other states or the federal government. Continue reading to learn about how the estate tax works in Florida, and call a seasoned West Palm Beach estate planning and elder law attorney with any questions or concerns.
An estate tax is a tax levied on the estate of a recently deceased party. Typically, estate taxes only apply to estates worth above a certain threshold value. Estate planning instruments like trusts and lifetime gifts may be used to avoid the consequences of an estate tax, depending on the state and the circumstances of the person.
First and foremost: There is no estate tax in the State of Florida. Florida is one of the majority of states that does not levy a tax on estates, regardless of the size of the estate. So long as the deceased person lived in the State of Florida, they should not owe any estate tax to Florida.
Inheritance tax is slightly different from an estate tax. The inheritance tax is levied on the money after it has been passed on to heirs. There is no inheritance tax in Florida. However, Florida heirs may still be subject to inheritance taxes from other states. Some states impose inheritance tax on out-of-state heirs so long as the decedent lived in that state. If your relative lived in one of those states, such as Pennsylvania or New Jersey, you may still owe an inheritance tax even though you live in Florida.
The IRS does have an estate tax. If you’ve inherited property from someone, the estate tax will be paid out of the estate before you get your property. The federal estate tax only applies to estates with a total value above a certain amount. As of 2021, the estate tax applies to estates worth more than $11.7 million. Married couples are entitled to double the estate tax exemption, meaning they can protect up to $23.4 million.
A savvy West Palm Beach estate planning attorney can help you and your family plan appropriately to ensure that your assets are distributed in accordance with your wishes after your passing. Ensure that your family is cared for and your affairs in order with help from a dedicated estate planning lawyer. If you are in need of a dedicated and thorough Florida estate planning and elder law attorney, contact the West Palm Beach elder law attorneys Shalloway & Shalloway at 561-686-6200.